A business model development strategy to expand into the bottom of the pyramid population

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A business model development strategy to expand into the bottom of the pyramid population

Ver Loren van Themaat, Tanye

2011-03

ENGLISH ABSTRACT: The Bottom of the Pyramid (BoP) population are those individuals who live under the poverty line. They
often do not have easy access to products and services, because the infrastructure to serve them is not
in place and most organisations consider the challenges of the BoP overwhelming and unconquerable.
The primary objective of this research is to develop a framework that guides an organisation through the
design of a business model, which will allow them to expand into the BoP population
Organisations face constant pressure to increase their market share and profits, and improve their
performance in the current aggressive environment. To retain their competitiveness they have to look at
unconventional and alternative markets.
By recognising the BoP as a potential emerging market, organisations can increase their market share or
enter new markets, thereby creating benefits for organisations and the BoP alike.
The reasons why organisations fail when targeting the BoP market are also identified in this research.
These reasons include aspects like organisations making assumptions about the BoP, not understanding
the BoP, not knowing how to approach the BoP market and being ignorant in designing a business model
tailored for the BoP market.
This research addresses the difficulties organisations face when they want to target the BoP by
developing a framework that allows an organisation to successfully target the BoP population. This
framework also fulfils the secondary objective of this research, which is to adhere to the three goals of
Sustainable Development:
• Fair treatment of all people: Giving all people, regardless of their level in the economic pyramid,
equal access to products and services. This is the foundation for social equity. Including the BoP
in economic activity by overcoming the constraints the BoP face;
• To not degrade the environment through sustainable design;
• Economic growth and development to ensure the organisation makes a profit.
Four primary research fields – Sustainable Development, Bottom of the Pyramid literature, Business
Models and Blue Ocean Strategy – were investigated and then aspects of these fields were merged to
form the Business Model Development Strategy. This framework offers a systematic approach for
organisations to first analyse and understand all aspects of the BoP and their environment, and then
develop a business model that fulfils the core requirements of the BoP.
It was found that if organisations want to successfully target the BoP, they have to fulfil the 4 A’s –
Acceptability, Awareness, Availability and Affordability – which are the core needs and requirements of
the BoP.
Using the Business Model Development Strategy as guideline, organisations can design a business
model that minimises the risk of failure when they target the BoP, while maintaining the principles of
Sustainable Development.